Why Netflix should buy AMC

Earlier today AMC announced they have secured the prequel to Breaking Bad, a show based on the popular supporting character, Lawyer Saul Goodman. What was particularly fascinating was that an article I read reported that Netflix bid for the show. This got me thinking…

Netflix should buy AMC. Here’s why:

1) AMC has more top content than any other network.

While its an unscientific poll, I have found it hard to find anyone I know that watches television who doesn’t love at least one of their hits: Breaking Bad, Walking Dead, and Mad Men. Their passion is to the degree they rave about it and tell anyone who doesn’t watch that they must. There is no other basic cable network that produces shows with such rabid followings (unless you count juggernaut ESPN’s sports programming).

What’s more is that Netflix knows this. They’re known as a heavily analytical company as they used it to create their hit show, House of Cards, and now they gave Breaking Bad a ratings boost that saw their premiere of Season 5 Part 2 double their previous ratings high. Given Breaking Bad is a continuous story, there is no other explanation than the Netflix binging helped widely expand their audience.

2) Netflix is at war with Amazon.

There is no doubt this is a 3 horse race for streaming supremacy between HBO, Netflix and Amazon. HBO owns its own content so the play here is directed squarely at Amazon. With such an acquisition, suddenly, to see those shows your friends have been raving about, you would have no choice but to join Netflix’s over 37 million subscribers. Amazon wants to be the first place you check for shows just like so many other goods. Losing out on multiple popular series would be a blow to that mindshare goal.

With Netflix’s subscription and retention strategy this is equally huge. There are 35 episodes of Walking Dead already aired with 9 coming this fall, 62 Breaking Bad episodes by the series finale in a few weeks, and 78 Mad Men episodes with a final season looming. A subscriber committed to watching even one of those shows through is likely to stay a subscriber for a few months to finish any of those series.

3) AMC needs Netflix.

As a passionate fan of Breaking Bad from the first season, I followed it closely between subsequent seasons. The ratings were tough but Bryan Cranston’s multiple Best Actor awards made it very hard to give up on it and the fan base grew as there were more and more shocking episodes. AMC often had tough negotiations, but they kept renewing.

However, things really got tough with the final season. AMC only had the budget for 12 episodes, but Vince Gilligan wanted 16 to end the show the way he had planned it. There were rumors of him even thinking about soliciting other networks. AMC worked it out but you also notice there was a huge 6 month break between the first 8 and second 8 episodes, thus spreading out the costs significantly.

It seems these conflicts weren’t the first time the network had to squeeze budgets on a hit show as there’s been rumored conflict for both Mad Men and Walking Dead. There has also been their feud with Dish network which caused an estimated $31 million in lost revenue, which is a big deal when your net income over that time was only $15 million on $367 million in revenue.  Getting a stable budget from Netflix would cushion them like never before. 

4) Netflix needs more content and AMC knows how to make it.

Netflix knows the value of letting artists follow their vision, as they spent over $100 million on their first show, House of Cards. Their model ditches the pilot and wait and see approach of television to instead trust artists to tell a full story in a complete season from the start. When this works it will be widely praised, but a series of misses would get costly fast.

AMC has shown they can make hit after hit. That is the kind of talent that Netflix needs to continue to grow their content arm. The AMC team that has discovered multiple unexpected projects could help see the story behind the analytics Netflix is so known for. Would their analytics predict these as hits:

  • A 60s and 70s era period piece about alcoholics and philanderers at an ad agency.
  • A graphic novel about zombies (ok maybe, that one they could see)
  • A cancer-ridden high school chemistry teacher turns into Scarface. (no way)

Taking the eye for talent at AMC and augmenting it with the analytics of Netflix could create a content powerhouse.

5) Netflix is already invested in AMC.

Underlying all of this is the bulk payments Netflix has to make to AMC to stream their content. They’ve been working together for years already and the relationship has proven positive for both as the halo effect of Netflix binging brings new viewers to AMC. As the network continues to grow its catalogue of hits I envision those checks getting bigger and bigger. Like any good partner to acquisition move, I suspect this could be the catalyst for such acquisition discussions to begin. Of course, the ratings boom Netflix is helping them with is driving up their price to cable companies, so the longer Netflix waits the more expensive it will get.

I don’t believe nor have a heard that any such deal is imminent or in talks. However, I do believe it makes a lot of sense especially as people cut the cord with their cable providers and a great network like AMC considers its role in such a post cable world. It would be an expensive move given AMC’s revenues, but they’ve already been willing to spend over $100 million on one season’s worth of a single show. AMC presents a one of a kind opportunity that fits Netflix’s expanding vision.

UPDATE:

Per some really insightful comments on Hacker News and some of the comments below, it appears I misjudged what AMC owns and not. What I would change this article to say then is why Netflix and AMC are going to become stronger and stronger partners going forward. There’s no reason to buy AMC, but they are proving very helpful to one another and potentially better served as two independent businesses with unique interests. I expect many more deals between the two companies.

3 Books Every Investor Should Read

As an entrepreneur, when I consider the ideal investor I would like to have, it’s a lot more than someone with money. I want them to have characteristics like:

  1. Able to make smart bets: Investments are largely made when it’s too early to tell with certainty who or what will win in a market. 
  2. Add value and insights: This is more than replaying personal war stories and biasing from your own experiences.
  3. Asking good questions: Someone who pushes founders to take a step back and recognize the things that matter often comes more from asking questions than providing answers.

Being great at those three things is no small task. Fortunately, there’s been some great books written that can supplement the knowledge and know-how of even the most veteran entrepreneur or get a new investor off on the right foot. These are books I’ve read and re-read because they’ve providing so much value to me and I believe can specifically help investors as well.

The Innovators Dilemma by Clayton Christensen

Disruption is a brutally abused word in tech these days. Clayton Christensen brings it back to reality and explains how it really works in this classic written in the 90s (and has arguably gotten better with age).

As an investor this is critical so you can call BS on an entrepreneur that claims they’re disruptive, but really are hopeless. This book will help you understand not only how to recognize disruptive technology in its earliest days, but what it means to get in the market, grab a position and successfully grow and take down the incumbents. Benjamin Tseng, a Bay Area VC, has a great post also discussing the value of this book for investors here.

Investor Scenario: A founder claims they have a disruptive innovation and are telling you about their immediate mass market plans, The research in Christensen’s book will help you guide them a better approach or to pass on the deal.

The Master Switch by Tim Wu

Over the past 100 years, communication platforms have dramatically changed and evolved. During this time, we’ve seen the emergence of the telephone, radio, television, email, the internet and more. Without fail, every time one of these new mediums emerged, they fought an uphill battle to eventually win the market.

This book goes perfectly hand in hand with Innovator’s Dilemma by walking you through how many technologies were slowly commercialized and changed the world. By the time you get to the end the patterns will be impossible to miss and priceless to match against what you see in new markets emerging (some of which you hopefully can invest and place strong bets on).

Investor Scenario: A founder has a transformative technology. Knowing the patterns of past innovative companies, you can help them anticipate resistance they may face both in the market and legally.

Tribal Leadership by Logan, King & Fischer-Wright

A book on culture to go hand in hand with two on innovation cycles? Absolutely. While there are other books out there I’ve rated higher on culture, none are more powerful for an investor.

You only get a limited amount of time with a founder and their team, so knowing how to quickly tell the difference between a strong team culture and one struggling is huge. What makes Tribal Leadership special is how it helps identify the key words that you can listen for to tip off how a company is really doing. 

Armed with this information, you can help a founder get back on track if some of the team has issues.  It can also help you decide if you should pass on an investment that looked good otherwise; a motivated, excited team will be significantly more productive, work longer hours and help recruit the best talent. You need those for the characteristics for a company to hit deadlines and win the market.

Investor Scenario: You visit one of your investment’s offices. If you overhear employees talking about their excitement for the mission, they’re operating at a high level. If instead they’re complaining about how much their work or a project sucks, you may want to ask the founder some questions.

——-

Unfortunately, many business books are a complete waste of time. Luckily, gems like the 3 books above exist and help tremendously to educate us, change our perspectives and diversify our knowledge on important subjects. I’d love to hear any great book recommendations in the comments for investors or entrepreneurs.

How 3D Printing Companies are using Kickstarter to Accelerate the 3D Revolution

In January 1975, Popular Science magazine ran an article on the first consumer computer: the Altair. Ed Roberts, the founder of the company making the Altair, ran ads in the magazine for pre-orders of his device for a then-shocking $400. He needed to sell 200 to break even, but ended up selling over 2,000 instead. There were many challenges in actually delivering the device and plenty of upset customers due to delays and limited functionality, but it marked a key moment at the start of the PC revolution. A small company named Microsoft would work closely with them to run BASIC software on it and many other hobbyist computers would emerge in coming years.

Today, the chosen pre-order crowd-funding source is Kickstarter and once again early adopter backing is funding a new revolution: consumer 3D Printing.

A quick search shows there have been over 75 projects posted on Kickstarter related to 3D printing. Of those, 5 are currently active and 35 have been funded (a 50% fund rate on completed campaigns). Since the start of 2013, 38 of these projects have launched, with 17 funded and 16 failed (the other 5 are still active). Some projects have even raised millions of dollars like the Buccaneer ($1.43mn, 3,520 backers), RigidBot ($1.09mn, 1,952 backers) and the 3Doodler ($2.34mn, 26,457 backers). All 3 of those projects launched in the last 6 months.

So with all this funding, how is it affecting those that post? To find out, I spoke to a variety of companies currently crowd-funding, planning to crowd-fund and already completed both successful and failed campaigns.

Preparation matters

The first thing that stood out for all the companies that I spoke with was how important preparation was for their projects. No matter how much time they spent to understand the work ahead, there were always surprises and new challenges. Those that hadn’t figured out the finer details of their project before launching the Kickstarter were significantly more likely to fail in funding.

The preparation also extends to marketing. Designer Todd Blatt, creator of the funded Google Glass project, GlassKap, observed, “[Many projects] think you just make a Kickstarter and people come. You can’t count on that.” I asked companies what the ratio was for backers that came organically from Kickstarter versus their own efforts and it was usually 60% their efforts. Getting ahead in their marketing meant thinking about press and forums to post to at launch and building lists in advance. DeltaPrintr, a delta-style RepRap design launching in the fall, is smartly already collecting signups on their detailed website which explains their product’s benefits and differentiators.

Screen Shot 2013-08-28 at 12.12.21 PM

The value extends beyond funds

Like a good angel investor, many of the backers on Kickstarter add more value than just their money. File2Part, a 2012 campaign for better 3D printing software, found that about 15% of their backers were tremendously helpful in debugging their beta release of their software as the backers were also software engineers. Meanwhile, DGlass3D, a current campaign to create a better dual extruder for 3D printers, has already gotten great feedback from hobbyists and hackers backing the project.

With so much traffic and attention given to many of the Kickstarter projects, it can also be a signal to those in the market that your company is someone they should work with. Volumental, a current campaign for browser-based 3D scanning and printing, has received numerous business opportunities because of the attention around their Kickstarter. They’ve also turned the campaign into press that extends beyond the project and helped raise the visibility of their company.

Even more impressive is how a failed campaign by 3Dagogo actually inspired them to start their business.  Their May 2013 campaign to sell 250 useful 3d printing designs did not fund, but many members of the 3D community reached out to them saying they were working on an important problem. That was all the encouragement they needed and they’re now working towards a site launch.

Critics can be harsh

While Kickstarter tries to manage backer expectations on projects, there are still times when users can be difficult or even angry. In the case of DGlass3D, some potential backers were upset with the way they planned to handle their IP for their design (a hot button subject in the 3d community). After some passionate discussion, it led to DGlass3D changing their IP plans and updating their description of it on their Kickstarter page.

Meanwhile, File2Part has had a number of delays on their project enraging some backers. Co-founder Eugene Giller told me that when they launched the campaign, they had a prototype of the software working with the printer they owned. Unfortunately, there are many variations on the firmware for other printers and some companies not only change them, but sometimes make them closed to 3rd parties (most notably, MakerBot). It has put them in a endless loop playing catch up, which unfortunately not all backers empathized with:

angry kickstarter backer

Stories like File2Part’s is why when I spoke with DeltaPrintr, they told me they are trying to have everything in line, even suppliers and manufacturing, before they launch their campaign. They hope that Kickstarter can simply then be the platform to connect with their first customers and add the funding needed to fulfill orders with their manufacturer, without delays and drama.

Funded projects do not guarantee success

It would be great to say that every campaign that funds on Kickstarter has a fairy tale ending of delivering on time and launching to ongoing success. Unfortunately, we know that’s far from true. 

Going beyond the disappointment of the end user who may receive their orders late, below their expectations or sadly, not at all, companies can face struggles as well. After the costs of making his video, marketing and adding the cost of printing the objects, 3D designer Todd Blatt found he didn’t make any money on his funded GlassKap project. He did tell me, he will likely do another project in the future based on his learnings from this one.

File2Part, who had the aforementioned firmware challenges, actually hired a consultant to help them with those issues. Unfortunately, the cost of that consultant exhausted all their funds raised which led them to take a loss overall on the project.

Understand your audience

The stories of success on Kickstarter have spread far and wide, which is why all of the people I spoke with turned to the platform for their company. However, it’s important to realize that like any website, there’s a specific audience that is generally found on Kickstarter. They are often consumers, with a bit of an early adopter and hacker edge to them. Some will back many projects, showing more allegiance to Kickstarter than any of the individual companies they back.

This proved a solid audience for GlassKap, as Todd was able to fund his project even though there are only 10,000 Google Glasses in the public now. Similarly, the consumer-friendliness of Volumental’s browser-based scanning also funded well with the Kickstarter audience.

Screen Shot 2013-08-28 at 1.46.31 PM

Meanwhile, 3Dagogo’s 250 3D print designs failed to fund, as many Kickstarter backers are still waiting for their Kickstarter-backed printers and many of the hackers and hobbyists with printers already have proven to be less interested in the pre-made designs.  And while File2Part did fully fund, they found many of their backers were not who they were hoping for; their goal is to build an industrial-grade 3D printer to sell and were not expecting to have so many consumer printers to support.

Kickstarter is an amazing platform for discovery and funding of great projects. Like the pre-orders of the Altair, it doesn’t always go as planned, but great things can come of it. Two 20-somethings from Harvard moved to New Mexico to write the software for the Altair. We may not have had Microsoft today if early adopters of the Altair hadn’t sent those checks to get their first consumer computers.

What new industry titans will come from crowdfunding like Kickstarter and the ecosystems they help create?

Interested in 3D Printing? Sign up for my newsletter and get 
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Sources:

Thanks to all of the companies that spoke with me for this article:

Consumer 3D Printing has a Twitter Problem

Back in 2009, Twitter was still the new kid on the block dealing with Fail Whales and a real question of what they were going to become. During that time people who didn’t use Twitter would often say, “Why would I join Twitter? I don’t care what you had for breakfast.” This proved to be a big hurdle for Twitter as they tried to slowly learn what hooked people and how to describe the value they provided so they could successfully go mainstream.

Today, 3D printing is in a very similar position. There’s tons of press talking about the potential and much activity in the ecosystem. However, just like with Twitter a few years ago, people look at consumer 3D printers today and say things like “I don’t get it. Why would I want to print a bunch of plastic junk?” 

How 3D printing will cross the chasm

What we’re really talking about is a disconnect between a product’s capabilities, its core value, and the average consumer. Twitter was able to cross the chasm thanks to their own learnings of how users best got value from them as well as fortuitous events like the Arab Spring and celebrity events like the passing of Michael Jackson showing a use case everyone could understand.

In the case of consumer 3D printing, they need a few things to happen:

1) Cheap, consumer friendly devices

Consumer electronics seem to currently do best when they’re priced at less than $1,000 (see the Kindle Fire, iPad, most laptops, etc). Currently, the vast majority of 3D printers at that price point require your own assembly and have a steep learning curve. Makerbot, Cubify and many of the Kickstarter printers like the Buccaneer are hard at work to get that price point down and the out of the box functionality significantly improved. Without this, nothing else below matters, because people won’t be able to figure out how to use them.

2) Separate the fantastic from the realistic

Every day there’s an article about something new about 3D printing in medicine, NASA, weaponry or something else exciting or controversial. Unfortunately, all that press hypes up the potential of 3D printers while setting unrealistic expectations on the current state of consumer printers. Helping separate the two is a challenge for everyone in the market. How do you get people excited about the (albeit limited) abilities of consumer 3D printing?

3) A Killer app

Right now, anyone can print what they can imagine if they have the CAD design skills. They can also explore sites like Thingiverse for designs they’d like to download and print. Unfortunately, even downloading a design isn’t guaranteed to be an easy, smooth experience. Even the emergence of cheap 3D scanners feels unlikely to be the silver bullet since consumers will still have the question of what to scan. All of this also ignores the limitation of single-color plastic as your usual printing option.

In another technology’s chasm crossing moment, the PC went mainstream with the inventions of the word processor and spreadsheet, which were 10x better experiences than the typewriter and manual bookkeeping. Not all of the limitations have to be overcome to create a killer app, but the question remains: What can 3D printing be 10x better than for an average consumer?

If there’s one thing we know for certain, it’s that movements like these don’t stop. It’s only a question of who leads the innovations and when the market will take the leap to mainstream.

If you’re interested in the 3D Printing industry and are looking for a few updates a month on the industry and observations on what’s next, sign up for my newsletter:

95 Ways to find your first customers for customer development or your first sale

You can have the best idea in the world, but until you find someone besides yourself that wants it, it’s not really a business.  To find those people, as Paul Graham wrote in a recent essay, you have to “Do Things That Don’t Scale.” The problem is, it is often unclear what those “Things” are.

Fortunately, the internet is full of help. In particular, I was inspired by recent posts on someone going from zero to revenue in 5 weeks using customer development and validation by Melissa Tsang for her new startup Cusoy. I’ve also found the advice for Joel of Buffer about his start and the advice from this post by Jason Cohen of ASmartBear blog to be spot on. With all that advice though I still hadn’t seen anyone tell you where to look.

How to use this post:

Before we get into the massive list of tactics below, I want to be clear on what to do with this list and what to expect when you find a few tactics you want to follow:

  1. Your initial goal should be learning.
    In the immortal words of Lean Godfather, Steve Blank, “No Plan Survives First Contact With Customers.” With that in mind, the last thing you want to do is be hard selling your idea to them. Instead, you want to interview your customers to understand their problems. You can learn how to do customer development interviews here.
  2. Understand you’re going to have a low success rate.
    There is no silver bullet for finding users for your startup, just tactics like the ones below that work to varying degrees depending on your idea and market. Even for good channels, a 10-20% response rate is normal, so don’t get discouraged.
  3. Don’t worry about scaling!
    None of the ideas below are really scalable when taken literally. However, like Paul Graham said in his essaydon’t worry about scaling right now. Just do whatever it takes to find people and the scalable methods will emerge later. If you have a cofounder worried about scaling early, have them read the Paul Graham essay.
  4. Remember your manners and personalize.
    You’re likely asking people to talk to you when you have nothing but an idea and maybe a prototype of some sort. Be respectful in communicating with them. Also realize that no one likes a form note, so the more you personalize it and make it feel like they’re special, the better chance you have of a response. Elizabeth Yin of Launchbit has an awesome slideshare with advice on reaching out to customers effectively.
  5. Don’t get banned.
    If you abuse any of the tactics below, many of the sites and groups will ban or block you. Pay attention to restrictions to how often you can do certain things (like Meetup.com allows you to message 12 users per day). Realize the more times you break a terms of service, the more likely you are to get noticed and banned. On the flip side, it is easier to ask for forgiveness than permission. Just don’t be egregious.

A special thanks to these people that helped edit & provide ideas for this post: 


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95 Ways to Find Your First Customers for Customer Development and Sales

Linkedin:

1) Use Linkedin Answers: Look for people asking questions around your problem and market or ask your own.

2) Join Linkedin Groups: Join Linkedin Groups for your target market. Engage in discussions there, reach out to people that post relevant ideas or questions, or post looking for help.

3) Use Search + InMail: If you know the kind of person you want to talk to, try searching for them (like VP Marketing at companies between 25-200 employees) and using InMail to message them.

Gabriel Prat InMail example.jpg

4) Check your existing connections: People change careers a lot more than you may expect.  You may have also lost touch with an old classmate that is now in just the right market. Either way, your existing connects are very likely to respond and you’ll have access to their email address, which is better than their LinkedIn inbox.

5) Ask your connections for intros: It’s quite possible the perfect people to talk to aren’t already a connection, but they may be one degree away. Don’t be afraid to ask connections you have a good relationship with for an intro.

6) Post to the Linkedin Social Network: Linkedin now has status updates you can post. It’s a lot less active than other networks, but it can’t hurt to see if anyone notices.

7) Run Linkedin Ads: Linkedin is the network for professionals and their careers. If your startup idea has them as the target customer (say marketers or executives), then an alternative to the high maintenance of Linkedin Groups can be to run ads. Linkedin also has a partner network for a lot of business content sites which can further the reach. There’s a great guide on KISSmetrics for Linkedin Ads here.

Facebook:

8) Look up your friends: For most people, their closest people in their life now and in the past are on Facebook. If you haven’t already exhausted your existing network on Linkedin, definitely look to see if any of your friends are in the market and worth talking to.

9) Ask your friends: There’s also a lot of random people you met in college and other times. You never know who knows who so you have to ask. I just got introduced to another person in tech through someone I was in a beirut league with in college.

10) Look for Fan Pages: There’s fan pages for just about anything you can think of. People that run those pages in your market are great people to talk to both as potential customers and to see if they’ll post something on your behalf on their page. Friends who have leveraged this have found it cheaper than Facebook ads, even when they pay the Fan Page owner. Just click the “message” button on the fan page.

fan page message button

11) Run Targeted Facebook Ads: If you think you really know your audience demographics, then running a small set of Facebook ads to a landing page, can be a great way to garner interest.

12) Try the new Graph Search: I haven’t had a lot of success using it, but it’s worth searching for things related to your market to see if anything else turns up, especially now that you can message people you aren’t friends with. In particular, Facebook has a great geographic filtering ability you won’t find on Twitter or otherwise.

Twitter: (My personal favorite)

13) Ask your followers: If you have any kind of follower base at all, you should definitely tweet about who you want to talk to. If you don’t have a big follower base, ask the people with bigger followings you’re friends with to ReTweet you. As you develop your idea, you may want to tweet different requests, which may be seen by different people since no one sees every tweet of their followers.

14) Ask your followers for referrals: It’s not just about who you know. The bigger benefit is who your network knows so be sure to not just ask people you follow or follow you if they’re a fit, but ask others for referrals.

15) Run Twitter Ads: Twitter ads can be a cheap way to reach people you’d never know otherwise. We got thousands of sign ups for MyAnalytics App at KISSmetrics using them. Like any channel, the more mature it gets, the more expensive it will become, so by 2015, this may not be nearly as economical (like many Adwords today).

16) Ask Twitter Accounts to tweet on your behalf: Just like you can ask Fan Pages on Facebook to talk about you, you can reach out to Twitter accounts in your target market to see if they’ll tweet something for you or ReTweet you. If it makes sense for your business, you can also ask some celebrities via tools like BuySellAds and Sponsored Tweets.

17) Search for relevant Hashtags: Hashtags are a big part of Twitter for many markets. For example, in the analytics market, there’s #Measure. Find accounts using the hashtag and reach out to them and join the conversations happening. Find relevant hashtags by asking others or checking out sites like Hashtags.org

Measure hashtag screenshot

18) Join a Twitter Chat: Many groups have regular chats that can be found based on the group’s hashtag they use. A great example is the Community Manager chat, #cmgrchat. This is a great way to ask questions and engage your target audience if they’re holding Twitter chats.

19) Search Twitter for People Talking about your Problem: Remember that time you were really annoyed at a company? What did you probably do? You tweeted about it. Try searching different ways for people talking about frustrations and you’re bound to find people happy to talk because they’re excited someone is going to make things better. I’ve successfully used this to talk to people about, of all things, email migration.

Email:

20) Email relevant friends/contacts: There’s a right way and wrong way to do this. Yes, you can spam all your contacts in one big dump asking for help. What will yield a better result is if you invest the time to be more targeted in who you reach out to. Close friends and family won’t mind and those actually related to your target industry.

21) Start a personal newsletter: I’ve known some people to start a personal newsletter to have their contacts *opt into* that then regularly updates them on your startup journey and can ask for specific help then repeatedly in the newsletter. This works great for getting mentors and early supporters engage in a small ask (just opt in) and later help more as you have different needs.

Personal Newsletter

22) Use Rapportive to find emails & cold email: Somehow you may have stumbled upon someone you’d *love* to talk to, but you don’t know them. You can use tools like Rapportive to guess the email address and send them a personal note asking to speak with them about what you’re working on. You can find more advice on this tactic here and here.

zuck rapportive

23) Make your GChat status a call for help/intros: This may seem simple and passive, but you’d be surprised who reads your GChat statuses. Adding a note of what you’re looking for and leave it up for a few days and you might just get a few people to help you out. This works for other chat tools as well, of course.

24) Make your signature a call for help/intros: Just like your GChat status is a long tail way to get people’s attention, you can use your email signature the same way. Below your name in your signature  is the perfect place to let people know. Don’t forget to update your mobile app’s signature as well as your computer’s.

Meetup.com:

25) Join & Attend Meetups in your category: Meetup has become an amazing hub of groups around just about any topic you can think of. Whether you’re making an app for LARPers or a hardware startup, there’s a meetup group likely in your area you should join to meet and talk with group members in your target market.

Meetup Group

26) Ask organizers to message the group: Organizers have unique privileges to send messages to their groups. You don’t get what you don’t ask for, so don’t be afraid to reach out to group organizers to talk to them (they may be a great target user) and see if they’ll message the group. They often make no money in running their groups, so you can think of them like the Facebook Fan Page owners previously mentioned.

27) Ask the organizer to allow you to address the audience at a Meetup: Potentially even better than getting into everyone’s cluttered inbox is the opportunity to address the whole group at one of their events. This allows people most interested to immediately approach you. This can be a great consolation ask if they don’t want to message their whole group since this requires no work on their part.

28) Mention in your Meetup profile what you’re looking for: Like the GChat status, this is a passive move that alone won’t get you everyone to talk to, but you’d be surprised how often people read the profiles of other new members in a group. Be sure to include your desired contact method if you want Meetup members to reach out to you.

29) Message users on Meetup.com: Not every member of a Meetup group attends every event and if there’s no upcoming meetups or it’s a group outside your area, you can still reach users by sending them individual messages. Per a great write up by Melissa Tsang, Meetup has a limit of 12 messages per day, which is still enough to get some quality responses as she writes in detail about.

30) Create a Meetup group: Just because a group doesn’t exist, does not mean there would not be interest. Countless people have launched successful businesses based on the idea of organizing a high value group. Just remember that if you do this, not only will you build trust and relationships with all the attendees, you’ll be the organizer who can send all those messages, decide who addresses the audience, etc.

Your Blog:

31) Write a blog post about the problem you’re solving:  If you feel you know some of the key problems that users are facing in your target market, write about it! If it resonates with them, they will share, upvote, tweet, etc it and some will even sign up as long as you remember to have a call to action to sign up at the end. You can see an example here, where 1,000 reads turned into 10 sign ups and a look at some famous companies that started with a blog here.

32) Post your blog to discussion sites in appropriate categories: Sites like Reddit and HackerNews are awesome to access established audiences for your market. Before posting, do your homework so you actually post it somewhere it’s welcome; a baker would not be well served to post their baking innovation on HackerNews, but a marketing startup would do very well posting to Inbound.org. By posting it to these sites you’ll significantly increase the reach of #31 and might also get some interesting commenters there you can reach out to like this example from Vero.

getvero hackernews

33) Update your About Page for what you’re looking for: Just like #23 and #28, it is always beneficial to list what your looking for on your About page. The most engaged people on your blog are likely to click to your about page to see who you are and if they see this, they can help even if they don’t read your specific blog post about your idea.

34) Make a page on your blog just about your market: Depending on your blogging platform, this could be easy or hard, but it can never hurt to organize your information in a way that people can easily navigate it. If you’re writing a whole series of items or have already created a lot of related content, this can be a great way to assert your expertise and act as a honeypot to draw in interested potential customers.

35) Start a blog just to talk about your industry: Don’t already have a blog or don’t want to talk about your startup on your existing blog? Then start a new one. It helps to have more content than just one post, so if you go this route, try to have a few posts you can post over a few weeks. If you know your startup’s domain, you can make this the start of your company’s blog. Especially for blogs like this, try to get users to either sign up for an email list or to explicitly sign up for customer interviews.

Other Blogs:

36) Reach out to other bloggers for interviews: Chances are, there are other people writing about the market and potentially even the problem you’re interested in solving. These people are generally very knowledgable on the market and so they make great customer interview candidates and can also shed a light on more places to look for people in your market.

37) Ask other bloggers to run an ad for you: Many bloggers, like those fan page owners, don’t make a lot of money, so they may be willing to run an ad for you for very cheap or mention you in a relevant post just because they’re nice or like you.

38) Ask other bloggers to write about you: Going beyond an ad (which may be seen on multiple posts) you can see if a blogger is willing to write a whole post about you. If you’ve already interviewed them and they’re excited about your idea, this may be an easier ask than you think (and thus do it for free).

39) Ask to write a guest blog post: If your own blog has no audience, the best thing you can do is get a post you’d write on your market/problem on a blog that does have your desired audience. Bloggers love having more content to share, so if it’s a good post, they’re very likely to be willing to publish it. Look for guidelines and advice on guest blogging on sites you want to write for like on KISSmetrics’s blog.

guest blog post image

40) Use Blog lists to find the right blogs: Not sure who to reach out to? Sites like Technorati, Blog Catalog and AllTop are great for finding out top blogs for things like Top Fashion Blogs or just about any other category. You can also look for other influencers on sites like Klout and PeerIndex.

41) Reach out to commenters: If you see passionate comments on someone else’s blog, follow the link and the profile/name from the comment to find out who they are and reach out to them. People usually will include a link back to their own blog, About.me profile or Twitter account from such a comment. This will give you a more direct, personal way to reach them, and avoid writing a bunch of comments, which the blog owner may then mark as spam and never be seen.

Q&A Sites like Quora, Quibb, & Answers.Onstartups 

42) Reach out to people that ask relevant questions: If you can see who asked a good question related to the problem you’re solving, reach out to them using any methods the site allows to see if they’ll do an interview.

43) Answer questions about your problem/market: If you’re already knowledgable on your market, don’t be afraid to jump in and answer open questions. The people that ask can become great people to talk to and are more likely to be responsive if you already helped them with your answer. Don’t be afraid to drop a mention of what you’re working on right in the answers. Thomas Schranz at Blossom.io has done a great job of doing this in a helpful, non-spammy way.

thomas good answer quora

44) Reach out to great answers: If you see someone who has given some great answers, they are likely very knowledgeable in your market and the problem you’re solving. Reach out to them to do an interview. Obviously, you’ll want to be careful it’s not a competitor. ;)

45) Ask questions to see who answers: There’s no reason not to join the conversation by asking questions as well. Reach out to the authors of any answers you find satisfactory or interesting. The best part of asking your own questions is that virtually every Q&A site will send you alerts when your question gets answered so you can easily keep track of them even if you ask a few.

46) Put Calls to Action in your Profile and Answer Subheadings: Sites like Quora allow you to put whatever subheading you want below an answer, so don’t be afraid to mention something about your startup there. Also, like the other sections, always put in your profile what you’re up to so anyone that checks you out (even for answers you may have written in other areas) can find you and potentially reach out.

IRL (In Real Life), aka “outside the building”

47) Approach people in native environments: Would your target customer be found in a coffee shop, grocery store or mall? Then go there and try talking to people. Like anything this is a skill. This can come off as harassing or creepy (and the store may ask you to leave) or it can work great. The founders of Sincerely have been know to walk over to a nearby mall and offer strangers money and app credits so they can see how a user uses their app.

48) Look for people unhappy with a service: Are you trying to make a real world activity (like finding a locksmith or a good mechanic) better? Then looking for disappointed people near that service may be just the unhappy customers you could delight with your service. After taking a bad cab ride, you’d be the perfect person to explain all the reasons you’d likely prefer to take an Uber next time.

49) Go to conferences for your target audience: Just about every industry has a few conferences related to it. Established businesses get booths, thought leaders speak and many deals get done.  You should be there too as you’ll never find such a concentration of people in your industry. Take advantage of attendee lists to figure out who you want to meet with. Offer to volunteer or just ask for a discount ticket because you’re a startup and you’ll be surprised what you may get.

50) Go to trade organization events: Depending on the business you’re in there may be regularly “Chamber of Commerce” style events where your target customers may be. This would work especially well if you’re targeting people who own brick and mortar stores or provide contract services.

51) Go to places you know they’ll congregate: Have an idea for people that own boats? Then going to your local marina is a *great* place to find boaters to talk to. Golfers might just be at the golf course or driving range, frequent fliers at an airport and teachers at a school. Timing is obviously everything, so be cognizant of when someone looks like they’re approachable and have time to kill versus trying to hurry somewhere else.

52) Ask people on long train rides or airplanes: I’m always amazed by the kinds of people I meet when riding Amtrak or flying. Sometimes serendipity can work in crazy ways, so don’t be afraid to tell random people you meet what you’re working on. They might just be helpful or someone nearby will overhear and jump in.

Your existing user base (even if small)

53) Offer a user Referral Program: You need a great product before you should be trying to aggressively hack your growth, but that shouldn’t stop you from offering an incentive to your existing users to help you get more users. They likely know where to find more of them (their social graph, emailing friends, etc) so a little incentive will get them to help you out. There’s a great Quora thread on the subject here. 

54) Ask your users via email: Especially in the early days, you should regularly talk to your users and be updating your whole user base regularly. As part of those updates for new features, major bug fixes and outreach, don’t be afraid to ask them for referrals to more users or people to talk to.

55) Always ask your users when you talk: Whether you’re doing a customer development interview, usability testing or just talking to a user about a support case, remember that you don’t get what you don’t ask for.  Ask them both if they know anyone specific who might also be interested in your startup as well as places they generally find other people. The latter may turn out to be a meetup, a Twitter chat or something else that is very target rich for you, but you would never have known.

Craigslist

56) Look for relevant postings: Does your startup idea do anything that is relevant to one of the many Craigslist categories? Quite a few companies have had great success building a massive business off just 1 category (see below). Try reaching out to posters to talk to them and later you can potentially scale this. AirBnb is the most famous recent example, which Andrew Chen highlights well here.

57) Make your own post: Just like you can respond to posters, you can also make your own posting in the appropriate category and filter the ensuing responses to find the right people to talk to. A friend working on a startup recently used this to success by making a basic post and then sending all respondents a qualifying survey to make sure they were a match. A small cash incentive in the posting will generally drive a solid response rate.

Forums, Micro Networks & Communities on the web

58) Join in the conversations on the sites: Just about any community exists on the web today. Many of them are in places you would have no idea exists until you dig in.  If you can’t find them initially, ask some of the early users you meet using some of the other tactics listed in this post. Once there, look around for people already talking about your problem you’re solving and join that conversation to learn more. You can also post new discussions specifically on your target subject to see who is interested.

slashdot comments

59) Message individual users of interest: If you see someone talking a lot about the problems or opportunities you’re working on, see if you can send a private message to them on the forum or at worst just reply to one of their comments asking to speak with them. Anyone sufficiently passionate will be excited to share their thoughts.

60) Reach out to moderators: If this is truly a community site (and not another company’s forums) then the moderators are often the most passionate people of all. Reach out to them as great people to talk to and learn from. As a moderator, they’ll be spending as much time as anyone following all the conversations there so they could provide valuable insight beyond their own experiences. If it is a company’s forum, then tread a bit more carefully depending on if your idea is competitive or complimentary.

61) Ask Moderators to post on your behalf or run an ad: Many forums on the web are run with very little revenue and more as a passion project. Therefore, much like some of the previously mentioned Fan Pages, etc, they may be open to posting on your behalf or running an ad for a very small fee. They’ll know the ins and outs of the site, which will give you a better chance of reaching the maximum audience.

Google Adwords & other ad networks

62) Run Adwords with a landing page: An efficient (though at times costly) way to build an early user list is to run a quick, targeted Adwords campaign linking to a sign up landing page. You can learn how to set that up here. There’s also good advice on evaluating the success or failure of such a campaign here and here.  Realize that paying to get a bunch of people on a list doesn’t validate much on its own. It’s then using that list to reach out to users and talk to them and ask them to pay for something that does.

cusoy landing page

63) Run ads on lesser known networks: Google may have the largest audience, but not the cheapest or best targeted. Consider your market and think about if other ad networks would work better. There’s everything to consider from Yahoo and Bing to mobile ad networks or blogger ad networks. You can find a list of alternatives here.

64) Have your SEO basics in order: What’s better than the perfect Adwords campaign? Showing up organically for searches on your problem. Great SEO takes time, but you can make sure to have the basics right from day 1 so that you can at least get a trickle of interested users to your blog or site. There are a lot of great tips on the KISSmetrics blog including this great SEO Guide for Beginners.

Newsletters

65) Talk to newsletter owners: Just like passionate people often run forums simply for the love of it, others will run newsletters. If you already subscribe to them, don’t be afraid to just reply to the newsletter and ask for a few minutes to talk to them. Most people are excited to hear from people who read their work!

66) Buy Ads using a newsletter ad tool: There’s a great newsletter ad network called Launchbit. It can be a great help in both finding out what newsletters exist in a category and allowing you to quickly set up an ad campaign across multiple such newsletters.

67) Ask for mentions in a newsletter: In addition to talking to newsletter owners as potential early adopters, you can also ask them for exposure. Many newsletters have no formal advertising system like Launchbit, so often you can just go direct to them to ask for a mention for little or no cost. The more excited they are for what you’re doing, the less likely it will cost you anything.

newsletter ad

68) Start your own industry newsletter: If you don’t find any newsletters in your category or are think there’s room for another one, then don’t be afraid to start your own! It will take time to build up an audience, but it’s a great way to put to work all those signups you’ve been driving to your landing page.  Often times, it’s easier to first get people on a newsletter and then later convert them to a paying customer.

Complimentary Startups

69) Reach out to complimentary startups: No matter your industry or idea, there will be others in the market you compliment. At KISSmetrics, there were many other SaaS tools we were happy to integrate with and swap customer/mailing lists. In most cases, our analytics was something their users needed and many of our customers could use a support tool, call tracking metrics or track a MailChimp email campaign.  The best case for success with this method is to target companies of similar size (ie- mailing lists and user bases are of similar size) as that assures an equally mutually beneficial relationship.

unbounce kissmetrics landing page deal

70) Ask to guest post on their blog: Just like there are industry blogs run by volunteers and people just generally passionate about the space, there are also companies with prominent blogs. One of the biggest challenges they often have is having enough content. Reach out to someone on the marketing team or any contact info you see on the blog and propose topics that allow you to naturally link to what you’re doing.

71) Find their users and reach out to them directly: If you think your idea would be helpful to that company’s audience, look for people actively engaging and discussing the company on all the platforms I’ve been writing about throughout this post. While it’s better to ask for forgiveness than permission, remember again to use tact so as to not be spammy or offend the company.

Your Competition

72) Watch what they do: As the saying goes, “When in Rome, do as the Romans do.” Chances are your competition has figured out at least a couple of spots where your customers exist and you can enter the conversation there as well. In more modern terms, if something they do works, then consider Jobs’s favorite quote, “Great artists steal.” Like their Facebook page, and follow the company and key employees on Twitter for some inspiration based on what they link to.

73) Look for social mentions: Especially if you’re trying to disrupt a large incumbent, there’s likely many people talking about your competition. Look for especially people complaining about the product or experience. These are perfect people to reach out to learn from and hopefully convert to giving you a try. This also works for other startups you’re competing with.

Ben Sardella outreach to MixPanel customer

74) Use research tools: Tools like MixRank, which shows the ads a site has been running, and Spyfu, which shows you the expected ad spend and keywords purchased for competition. If you’re looking for inspiration on the kinds of ads to try, those tools will help you get there.

Data Research Tools

75) Use Datanyze: This tool will tell you what apps any of the top 1,000,000+ websites are using as well as what they’ve recently quit. It’s transformed more than one sales team I know and provides priceless information on the state of just about any web SaaS market. Their free demo can help you understand market share, while the pricey version has alerts for specific tools and lets you see what any site is currently using.

Datanize market share tool

76) Leverage tools that tell you contact info for key roles: If you know the persona of your target customer, then a list like Hoover’s or Jigsaw can help you find some of those types of users at especially bigger companies. Note that this lists they have aren’t 100% accurate, nor are they cheap. Try to hustle access via a friend or advisor.

Your College, University or School

77) Ask your professors: Many professors live vicariously through their students, and are happy to help out current students as well as alumni. If you had a professor that you had a particularly strong relationship with that is relevant to your startup, definitely reconnect with them. Also realize that many professors will talk to alumni who they never taught. Most professors have industry contacts they can help you with introductions as well as be a great channel to their students as potential customers or hires whether via emailing them or letting you address the class.

78) Leverage your alumni network: Whether it’s old clubs you belonged to, a fraternity or sorority or simply the alumni group for the city you’re in, you’d be amazed what people may be doing after school regardless of major or study habits. Don’t be afraid to both reach out to old classmates and club members as well as reach out to the clubs themselves for help from current members. Every student group I was in loved to hear from alumni.

79) Use your alumni directory: Many schools have searchable alumni directories that can allow you to track down contacts at some of the most powerful positions in the world. The shared experience of going to the same school is often all you need to mention to get someone who normally would be unreachable to suddenly be accessible to you for a meeting, mentorship or the right introduction.

alumni directories

80) Reach out to student groups: Even if you weren’t a member of the group, student groups are usually excited to hear from alumni. If any student group fits as a target customer for your startup, you should reach out to them. Playing the alumni card often gets you a great response and can often lead to offers to help you in many ways. They can email their list, let you address the group at a meeting or assist in recruiting help.

Leveraging the Physical World

81) Post an offer in public places: Bulletin boards still physically exist in many places and people still put up physical signs for all kinds of things. The stereotype are things like meetings and guitar lessons, but that doesn’t mean you can’t get attention being creative. If you know there are places your target audience will go to or pass by, consider posting something to get their attention. If you’re doing a Concierge MVP for your idea, this is a great way to start.

82) Use handouts, fliers or mailers: If hanging something up and hoping people will read it and respond doesn’t work for you, consider a more 1 to 1 communication through handouts you can give out or mail. One person I met that had a parking ticket app would carry fliers with him and put their flier under the wiper of a car that already had a parking ticket on it as well. It had a massive conversion rate. Get creative!

83) Buy someone’s service: So you want to start a business serving artists, or maybe housecleaners or some other service? Try buying their service and take a few minutes before or after their service to talk to them.  If they care about customer service, they’ll be happy to discuss their problems with you. A friend of mine started his mobile invoicing startup based on the problems his cleaning lady had tracking payments.

Kickstarter & other funding sites

84) Look for products getting funded in your industry: Funding sites are booming which means all kinds of companies and ideas are getting funded. Others in your industry can be incredible sources of knowledge not just on how to run a campaign, but what they’ve learned from interacting with their new customers.

85) Ask complimentary funded projects for help: A fellow crowd-funded project that has finished their funding will be very busy trying to deliver their product to their supporters, but they might just be willing to send a message, tweet or post on your behalf. If their funding is still open, you may be able to swap promotion to your audience and theirs. Remember: You don’t get what you don’t ask for!

kickstarter contact

86) Reach out to users that backed the project: Every Kickstarter has a tab for Backers which includes their profiles, which you can click to see what else they’ve backed. While they have no messaging system (Indiegogo does), with their full names on Kickstarter, you can likely Google or search Twitter or Linkedin for them and message them there.

87) Put your idea on a funding site: If you feel you’ve validated your idea enough, then running your own crowd-funding campaign is a great way to validate interest for your idea. There is tons of information on the web about making the most of a campaign, just search on Google or Quora.

Youtube

88) Talk to Youtube Channel owners: Youtube is filled with creators making content on all kinds of markets. If you go to Youtube’s channel search, you can search for your category and see who has channels and how many subscribers they reach. Just like you can talk to bloggers as experts in a market, you can learn a lot by interviewing channel owners.

Youtube Channe

89) Ask channel owners for promotion: If your idea resonates with the channel owner, there’s a good chance you can get them to talk about you on one of their episodes or maybe even have you as a guest. They may charge you a fee, but if it’s your exact target audience, it might just be worth it.

90) Start your own channel: If you think video is a great medium to communicate with your audience then creating a channel to connect with them may be a great option. Just like starting your own Meetup group, it can initially be hard, but once you’ve built an audience it will have a great, long-term payoff.

91) Run ads on Youtube: Youtube leverages Google’s ad powers to run targeted ads. You only pay for the ads people fully watch (not skip) so if video seems a powerful way to communicate with your audience, it’s worth experimenting. Remember, Dropbox started with nothing but a video and got over 75,000 signups (although they did not run it as a video ad).

Your own Product:

92) Put your name on it: If any part of your product can be seen by a non-customer, make sure your name is on it. This is easy, free marketing that your customers can provide for you simply in using your product. KISSinsights (now Qualaroo) had incredible growth without doing any paid advertising because of a simple link in each of their pop up surveys.

qualaroo powered by93) Make sharing an option for more access: If your product has metered usage, then you will always have customers who are uncomfortable moving up to a new, costlier tier. MixPanel has a free 50,000 events plan that can become a free 175,000 plan if you put their logo on your homepage. I’ve seen countless startups with that logo in their footer for just this reason, so don’t think your users won’t do it until you try.

94) Build a product “worth tweeting about”: In the rush to build MVPs and move fast, it can be easy to end up building a half assed product instead of half a product. If you instead solve a deep pain in a delightful way, people will naturally rave about it. Crashlytics, which was Twitter’s largest acquisition ever, used this strategy to experience viral growth of their app crash reporting tool.

Mobile:

95) Run ads in your side project apps: A number of my friends have built apps as side projects that end up having a few thousand users that never really monetized or amounted to anything. As a free user base you can always insert your own ads into your app. I met one of the founders at QBix that built the Groups App for the iPhone (helping you organize your contacts) and they used this tactic to drive people to their other apps. You can also send them to mobile landing pages to avoid building anything.

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Woah…that was a lot. Thank you for making it to the end.

I hope a few of these have inspired you and point you in the right direction to find those difficult first few users. While some of them are paid options, I hope you see how many alternatives there are to paid acquisition on Day 1.

There are many, many more ways to find your first users, so let your creativity run wild (like making a fake Vodka brand to launch your events site) and just remember to focus on learning and don’t worry about scaling on Day 1.

What are the most clever ways you’ve heard to find your first users?

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Why Travis Kalanick is going to be a Transportation Rockefeller

{Ed. note: I’ve been a big fan of Uber since I attended their Boston launch dinner where they shared a lot of the behind the scenes of their operations. Since then, when I ride in Ubers, I can’t help but strike a conversation with the drivers. This has helped me learn the inner workings of their market in addition to the press we’ve all seen.}

I’ve always believed you can learn a great deal from studying the past. While times may change, innovation cycles and the way society handles disruption is often very similar (I highly recommend The Master Switch if this concept interests you). While the oil industry may be very different than the urban transportation market, I think there are a number of parallels between legendary leader of Standard Oil, John D. Rockefeller, and Uber’s CEO, Travis Kalanick. Knowing this, we can make some very interesting predictions on what the future holds for Uber.

The Legendary Mr. Rockefeller

John D. Rockefeller was one of the most successful entrepreneurs of his generation. Thanks to his rapid dominance of the oil industry, he was a multi-millionaire in 1870 when the average worker was making just $2-$3 per day and amassed a net worth of over $1.5 billion by the time he retired decades later. He accomplished this through repeated innovation and reinvention of his core business as well as expansion to control as much of the market and his supply chain as possible.

There was also a dark side. Rockefeller had a habit of clashing with the press and fighting with regulators over his aggressive business practices.  He crushed his competition through these practices, often giving them the choice to be acquired at a profit or ruthlessly run into the ground. He would often brazenly share his financials with them showing just how strong a war chest he would have against them. After acquisition, he would turn newly acquired business owners into spies and pawns for the benefit of Standard Oil.

You can criticize such tactics, but not the results of Rockefeller’s efforts. In order to create such a monopoly, he had to have a ruthless side. If he was not aggressive with competition and regulators, his growth would not have been as rapid. Travis appears to have a similar approach to business which is a big part of why I believe Uber has such strong potential for a new monopoly.

Uber: A modern, emerging monopoly

With Uber close to a new $361 Million+ financing round at a stunning $3.7 Billion valuation, Travis Kalanick has the funds necessary to dominate the transportation market in cities around the world and at a stunning pricing (less than 5% of his company for that $150Mn). Per their website, they’re approaching 40 cities now with over $125 million in revenue expected this year. With 5 in shh! early launch mode, that means that each city is already generating an average of $4 million in revenue annually.

Taking a quick look at world population figures for major cities, it appears there are 450 cities with at least 1 million people living there (and thus could be good markets for Uber). Doing simple, back of napkin math, that equates to over $1.8 billion in potential annual revenue.  Some of those cities may not be suited for Uber (see Vancouver), but looking at how Uber continues to grow even in its home city of San Francisco 4 years later,  it’s not unreasonable to believe that city revenue average may be 2-3 times as high in years to come.

Crushing the competition

2 key competitors stand between Uber and Rockefeller-like industry domination: ride sharing apps and taxi cabs. Both are at a distinct disadvantage to Uber.

Ride Sharing Apps

The main ride sharing apps in play are Lyft and Sidecar. To date, Lyft has raised $75 million and operates in 5 US cities, while Sidecar is in 6 cities, but only has raised $10 million. Rumor has it, the latter has struggled to raise their next round of funding to keep up in this transportation arms race.

To combat this competition, Uber is doing a few brilliant things:

  1. UberX exists in every city that Lyft or Sidecar is in (LA, Boston, SF, Seattle, Chicago, DC) by following the Burger King strategy:

    Uber has said that it will consider offering ride-sharing services in markets in which it operates if a competitor has launched and is operating for 30 days without any direct enforcement against it. It’ll consider that “tacit approval.” – TechCrunch 4/12/2013

  2. Uber is aggressively advertising to recruit away their drivers:

    Anti-Lyft ad on a bus in San Francisco              (credit Om Malik)

  3. Uber does not discourage drivers from using UberX and another ride sharing app. I’ve noticed some drivers having multiple phones in their cars, one for each service. This is a huge advantage for Uber that has had a multi-year head start on figuring out logistics and optimization for drivers and riders. In the end, drivers just want as little idle time as possible to maximize money they make, which means Uber has a chance to make them feel Uber is all they need.
  4. Uber cut their prices on UberX to be price competitive with ride sharing as well as go head to head with Taxi prices (more on this in a moment).

Taxis

The taxi owners are the ones that fight Uber the most. There was actually a protest earlier this week in SF because of it. They protest, because they’re being disrupted. But you have to ask yourself what’s really being disrupted?

In conversations with drivers who have quit their cabs to become UberX drivers, I learned the following:

  • Cab drivers pay anywhere from $120 to $150 each day to drive their cabs. That’s over $30,000 per year if you worked it like a full time job.
  • It’s not unusual to work a 12 hour shift and not make your whole fee back in fares.
  • Cab companies force you to work brutal shifts at hours like 4am to 4pm.
  • Cab companies will not help you in any way if you have problems during your shift.
  • Cab companies can take months to pay you for credit card transactions (Now you know why drivers often break the credit card readers).
  • Dispatchers rarely will give you a rider and may provide incorrect information.

Now contrast that with Uber:

  • Uber takes 20% of each ride. Drivers are profitable from the first ride of the day.
  • Uber provides drivers with heat map data of the best places to locate themselves to get ride requests.
  • Uber’s mobile app sends you riders to pick up. No more searching for people flagging them down on busy roads.
  • Uber pays drivers weekly.
  • Uber takes care of their drivers (a driver had a passenger using a stolen credit card. Uber called them, had them stop driving the person around and still paid him for all the driving he had done).
  • Uber lets drivers make their own hours.
  • Uber handles all payments. No more carrying cash or dealing with credit card readers.

Is it any wonder that a former taxi dispatcher I recently had for a driver told me that for the first time, cab companies are needing to advertise they need drivers? He also mentioned that he knows some SF Taxi lots have as many as 30-40 cars a day now that aren’t getting taken out. Five years ago, that would have been absolutely unheard of. Today, it represents the beginning of the end for the cab industry.

So to crush the Taxi side of their competition, Uber is doing the following:

  1. Dramatically improving the work experience for taxi drivers (see above). This steals the employees right out from under the cab companies.
  2. Going to price war via UberX and specifically marketing that it’s “10% lower than Taxi prices.”
  3. Maintaining high standards for drivers. You’re fired at Uber if you drop below a 4.7 Star rating. This means that as Uber steals the best drivers from the cab companies, an increasing percentage of remaining cab drivers will be the smelly, violent, rude nightmare cab rides. This will not help their reputation or market share.
  4. Entering new markets as a Trojan Horse. Today, only 10 of the 40 markets Uber operates in have UberX. They first come in as a higher priced option of black cars, which have stronger legal standing and can be sold as less of a direct threat to cabs. Once established with a strong base of users, Uber can launch UberX. When cabs complain, there’s a strong user base to be rallied as public support for Uber (Travis’s go-to tactic) and pent up demand to be satisfied and taken away from cabs.

More than a one-trick pony

Rockefeller made his money initially simply drilling for oil and then soon thereafter refining it.  However, he soon realized he could make more money by building his own oil pipelines (thus no longer needing the costly railroad tycoons) and finding new uses for his oil (at one time gasoline was a waste product, then he met an early inventor of the first cars). Looking at Uber, you can see that same potential being realized.

Uber has already expanded their service offerings in various cities with the most diverse being in Paris:

Uber Paris Vehicle Options

Uber Paris Vehicle Options

As Travis recently said, “If we don’t give the consumer choice, the consumer is going to go elsewhere.”

At the same time, the pitch that Uber has for their long term dream is already leading to interesting experiments:

“We like to think of Uber as the cross between lifestyle and logistics, where lifestyle is what you want and logistics is how you get it there,” - Travis Kalanick

You can see this logistics play not just in how they deliver a car to a rider in an average of 3 minutes or less but in their experiments to deliver ice cream in 30 cities and BBQ in Austin. And as much as you may think they’re a publicity stunt, they were charging $30 in San Francisco for 4 basic ice cream truck items, so they definitely were profitable (what else would you expect from such a pure capitalist?). A brand with strong loyalty and a premium reputation stands to have great margins on everything they do.

So what’s in Uber’s future?

We’ve seen many monopolies before in our American economy, but never has anyone consolidated the transportation market like Uber is on its way to doing. Today, cab companies are generally owned on a city by city basis that puts them on a level playing field with their state and city governments. When Uber is finished putting the cabs out of business, they will suddenly have power in every major city they control. A city government against a multi-national, extremely profitable corporation may prove to be an unfair fight.

Travis may seem like a white knight for disrupting the awful cab system, but he may turn out to be a different kind of ruthless monster when he’s the one in full control based on what we’ve already seen from him and what Rockefeller did as he captured 90% of the oil market.

Based on this, here’s what I predict the future holds:

1) New taxes and regulations

In the end, no city, state or national government ever found a new industry they didn’t feel the need to write new laws and regulations for and to tax. I know Travis will fight this tooth and nail and it will likely use up some of the good will that the company has due to their great brand, customer service and flawless app performance. I expect the new CPUC regulations announced are just the beginning.

At the least, every city will be looking to replace any lost revenue they used to receive from Taxis. Should these regulations and taxes be enacted, I expect Uber will pass along any costs that are incurred from them and try to leverage their user base to complain about them to politicians as they’ve done many times before.

2) Uber will acquire or crush Sidecar in the next 12 months

Just like Rockefeller used to go to lesser competitors and show them his full power and offer them the option of join or die, I expect Uber to do this with Sidecar. Conveniently, they both will have Google as investors now, which should help facilitate a deal and signals an unlikeliness that Google will put more money into Sidecar. They would be wise to take such an offer as Rockefeller made many of his former competitors rich as Standard Oil shares skyrocketed in value. Those that didn’t take Rockefeller’s offer were driven to bankruptcy.

3) Violence will emerge between cab companies and Uber

I’ve heard a few stories about slashed tires and intimidated drivers in SF and LA. Given that many of the cab companies are run by individuals with alleged mob ties, it’s not unreasonable to believe that as they keep losing drivers and fees, they may turn to more than political pressure and legal routes to fight Uber. If this happens, I expect Travis will be extremely public about it and use his favorite weapon, the media and his loyal customer base, to decry such actions. The question is if any will come after Uber the company, not the drivers (let’s hope I’m wrong here). I’d have good security at the Uber offices if I were Travis.

4) New revenue models will emerge from Uber

On the positive side, I expect Uber to continue to do experiments like the Ice Cream trucks. I could see more food delivery, perhaps Santa suits for Santacon or a partnership with stores to pick up and deliver something you order. They could also go deeper on the corporate services side beyond their current employee perks system launched in February.

On the negative side, I expect that if Uber does reach full monopoly they’ll take advantage of it in their pricing not unlike their holiday surge pricing. The fact that they have so many passionate advocates for a premium brand will only help them in both cases; the margins will be great on future forays into other types of logistics or delivery, and any mistakes will have room for forgiveness (like surge pricing during natural disasters).

5) An acquisition bidding war between Amazon and Google

With the latest valuation being estimated at over $3.7 Billion, there are very very few companies that can still pay out a price to justify acquiring Uber. Google and Amazon both have good reason to be interested and have the financial standing to potentially do it:

  • Amazon: Just like Uber takes pride in its logistics efforts, Amazon does the same in shipping items around the world from their sophisticated warehouses. As they push for same day delivery, a service like Uber and it’s underlying technology would be invaluable. Jeff Bezos is listed as part of the Series B financing, which further demonstrates the potential interest level.
  • Google: Google has invested heavily in Google Maps both with their impressive redesign for iOS this year and the major acquisition of Waze, the real time traffic tool. Add to this their ongoing investment in self-driving cars and suddenly you can see a world where Google provides self-driving cars for the Uber service in the future. Google’s alleged investment in this round shows their deep interest in Uber and willingness to pay at a high valuation.

In the end though, Travis, with his love of Ayn Rand, does not strike me as someone who would want to sell to anyone at any price. Both Amazon and Google make potential excellent future partners and his unique vision for the world and approach to doing business seems best suited for the driver’s seat.

Rockefeller not only didn’t sell until he wanted to retire and focus on philanthropy, he vigorously fought the anti-trust efforts to break up his oil company (which could one day strike Uber if they truly dominate transportation). That sounds like just the path I’d expect someone as bold as Travis to follow.

As an entrepreneur and heavy Uber user, I’m excited to watch all of this play out. Given Travis’s brazen attitude and flair for theatrics, I expect this to be very entertaining ride for us all.

What do you expect the future holds for Uber and Travis?

Thanks to Hiten Shah and Ryan Durkin for reviewing this post.

The Unscientific Causes and Cure to Burnout

Having recently burned myself out, it feels like it’s the unspoken condition plaguing those working in startups. It’s as debilitating to us as a torn ACL to a pro athlete, but is hard to recognize on the surface and not something you go to the doctor for. My hope is to help you and your team either avoid getting burnt out like I am, or if you are burnt out, help you understand the causes and how to bounce back.

Burnout != Tired

For starters, it’s important to understand this distinction. I’ve been plenty tired before. The kind of tired where you sleep all weekend or you skip an early morning class or meeting because sleep seems more important. In college, I would go with only 20 hours of sleep in a week during midterms or finals where I would be known to duck out of a classroom to do pushups to stay awake (yes, in retrospect, stupid). I continued similar behavior after college when working on my own startups or on the job, but after a good night or two’s sleep I was always ready for more.

Unlike those times, over the past couple of months I fell off the cliff into burnout. I managed to both physically and mentally exhaust myself in a way I never experienced before. So what was the difference? 

What causes burnout?

Simply put, it’s all about Passion.

When you do things you love and are passionate about, they actually renew you instead of taking energy. The problem emerges when that passion you feed on declines and work starts actually feeling like work. This quickly starts a death spiral as you need more and more energy to perform at the same level you’re accustomed. When you use up all of your reserves, you will find yourself burnt out.

As I was on the way down to burnout, this quote from Steve Jobs’s commencement speech really started to hit home:

“If today were the last day of my life, would I want to do what I am about to do today?” And whenever the answer has been “No” for too many days in a row, I know I need to change something.

It’s important to understand why you would wake up and feel that way. The things most likely to make you feel that way include: (See more on this MayoClinc article on burnout)

  • Your work not feeling important
  • Lack of recognition for your efforts
  • Not seeing the results of your efforts
  • Not working on things you’re excited about
  • Lack of real progress being made on your projects
  • Repeatedly clashing with a coworker, manager or leader
  • A shift in your company’s culture that is unappealing to you
  • Misalignment between your values and the ones exhibited by your employer
  • Feeling like you have no control over your work (i.e.- lack of independence/decision making ability)

If you’re an employer/founder, take a good look at that list. Anyone who you think would answer Yes to more than one of those items is at risk for burnout or leaving your company.

How do you overcome burnout?

After admitting that I was really burnt out, I started talking to a lot of people about it and found that a surprising number of people had experienced it. Thanks to their advice, I learned a lot about how to recover (an ongoing process for me now):

  • Travel: Getting out of your current environment and just enjoying a place you visit can do a lot to recharge you. One friend told me the founder he worked for spent a month on a secluded island in the Caribbean after a stressful acquisition process and “never felt more revitalized” when he returned. The location doesn’t matter as much as the removal of stress and normal day-to-day duties and triggers.
  • Turn off technology: All our apps, social media accounts and email draw energy from us one small bite at a time. Every person I talked to mentioned the importance of turning off push notifications and rationing exposure to these attention-demanding items to really rest the mind.
  • Write down things that really matter to you: It’s easy to never make time to think about big ideas that matter to you. When I spent a week in Santa Monica, I spent a day each on questions like, “What are my personal values?”, “What’s most important to me personally?” and “What do I want professionally?” These can often reveal mismatches in your life that may have led to your burnout and reveal what you should do next.
  • Be ok doing *nothing*: As a confessed workaholic, this was really hard. I love feeling productive and that I accomplished a lot every day. To recover though, you need to let your brain rest, which means doing things like going for a walk or sitting in nature with no purpose in mind. (Joel of Buffer’s nightly walk is a great example of a way to maintain your energy levels)
  • Be honest with yourself and others: For about a month at my job I was in denial of what was happening. I actually pushed myself harder at first and then thought if I eased up a little it would be ok. Both only made it worse. Having now had a few weeks to truly recover and been honest with people has helped tremendously; people are much more understanding of slow responses and postponed meetings when they know why (and can sometimes even help).
  • Confront the problem(s): Often, the trigger for all those feelings that send you on your way to burnout are related to a person or a part of your environment. You absolutely have to bring change to things that are causing the stress or no amount of travel and rest will matter. One of my friends who helped with this post was able to save a strained relationship by finally having a tough conversation on how he and one of his cofounders communicated.
  • Don’t be afraid to move on: If you are unable to confront and resolve the causes of your stressful environment that caused the burnout in the first place, it is best to move on. Lingering will only burn you out further, lengthening the necessary recovery time. It can be scary to consider doing anything but what you’re currently doing, but admitting it’s an option and thinking about what you’d do instead may very well be the push you need to make a choice that’s best for everyone.
  • Realize it’s a marathon: Unfortunately, you don’t wake up one morning and you’re no longer burnt out. Instead, you feel a little better or worse every day depending on how well you’ve taken care of yourself. Use the recovery process as a way to build healthier ongoing habits and watch for the triggers that got you there in the first place so you never return. Most people told me recovery is measured in months not days or weeks.

Why do people let themselves get burnt out?

If you’ve never burnt yourself out, consider yourself lucky. You may wonder why people didn’t do something about this before fully burning out. There are a lot of reasons, but the ones I heard most commonly were:

  • Pride: “I’ll be fine. I always come through.”
  • Money: “The money’s so good, how can I quit this job even if I don’t *love* it?”
  • Loyalty: “I can’t quit. I’d let down [investors, cofounder, manager, teammates].”
  • Denial: “This is nothing. It will pass and I’ll be fine. I just need a good night’s sleep.”
  • Fear: “What would I do if I left?”

This is where you, the manager, founder or friend comes in; sometimes people need help realizing (or admitting) what’s going on. Recognize this and help them resolve it whether they need a vacation, a different role in the company or it’s time for them to move on.

—-

Why did I write this?

There’s been a lot written on burnout, but I felt like no one really boiled it down to its common, core elements. Hopefully some aspect of this is helpful for you, a friend, a coworker or your team whether you’re avoiding burnout or dealing with it already.

There’s a lot more to be said about burnout, so I hope you can share your experiences and great links to more on the subject in the comments.

Further Reading:

In my process of researching burnout, I came across some helpful links that are worth reading if you have additional interest in the subject (I’ll add any others you share in the comments):

Do you really read?

Spend five minutes on any social media site and you’ll see hundreds of articles shared and discussed. In our world of infinite knowledge at our fingertips, the challenge now becomes Quality, not Quantity.  As you read any article, book, answer or social media post, it’s important to take the time to digest what you consume.  Did you just waste ten minutes or was it worth the read? What did you learn? Do you really get it?

In our fervor to join the conversation or “catch up” on those thousands of articles you’ve saved in RSS, Pocket, Instapaper, or otherwise, we often miss the point.

We are all Hypocrites.

Too often we read something, share it and talk about it, but fail to retain its meaning. Maybe you retweeted something about taking care of employees, but then you failed to show interest and compassion for an employee that came into work visibly upset. Maybe you just shared an article about the importance of open communication, but then disregarded comments from someone who tried to bring up a problem with you. Regardless of what it is, you’re wasting your time with all your reading if you don’t use it to drive action.

I struggle every day to follow through on the things I passionately read and write about. As a habit, I re-read my own posts to remind myself what I care about so much. It’s easy to forget things like actually giving praise despite knowing how important praise is in motivating and appreciating your employees, remembering to always use the best structure for customer development interviews, or to keep applying the best takeaways from a great book I read.

What do we do about it?

I challenge myself to answer the following questions in everything I read:

  1. Has this taught me anything new and valuable? (If not, move on quickly)
  2. How can I apply insights from this article today? (Wait and I’ll forget)
  3. When have I applied the ideas from this post? Where have I not, but could have? (What was the difference?)

The real key is Self-Awareness with Discipline.

One of the hardest things to do in life is to get outside your ego. This awesome post by the CEO & founder of Redfin captures it well:  

“Most people spend nearly all their energy trying not to change. This is what the philosopher William James meant when he wrote the mind’s main function was to be a fortress for protecting your ego from reality. When the mind has to accommodate a new fact, James argued, it doesn’t settle on the change to its model of reality that is most likely to reflect reality. It protects the fortress, calculating the smallest possible modification to its bulwarks that can account for the new fact.

As I read and observe my daily life, I try to look for opportunities to apply all the great things I’m reading and everyone is sharing. And when I write or give others advice, I challenge myself to make those things not just aspirational or what I do at my best, but what I apply day in and day out. It’s not easy, and I don’t always succeed at this, but it has helped make me and those I interact with a little better every day.

How do you apply what you’re reading?

 

Founders: You don’t own your employees

[Ed. note: This is in response to a post by David Hauser entitled, "The Startup Side Project Bubble" which you can read here: http://buff.ly/10Lw9ek]

So many founders forget something simple: You do not own your employees.

They are human beings with their own passions, interests and lives. You have a vision of a reality you want to create. After much labor and hard work to get it off the ground, either funding or your own revenue allows you to hire help. Those people are choosing to devote a significant portion of their lives to your cause to help make it possible. Take a moment to appreciate that. 

In David’s post he argues that employees having side projects is bad for them and his business. This is so backwards.

First, telling someone what they should and shouldn’t do in their free time is a tremendous insult to them and their personal judgment.  It’s also incredibly short-sighted.

You want employees with side projects.

Especially for the creators at a startup (ie- the people that design and build your product), there is tremendous benefit to them having side projects. A few of those benefits are:

  • Experimentation. An outlet to experiment with new technologies before suggesting the company use them; no amount of research compares to having used a new framework and being able to provide first person accounts of the tradeoffs.
  • Independence. A place where they can make all the decisions (for better and worse) versus the negotiations that often happen in a company. You can also call this their creative release.
  • Mastery. The ability to further hone skills in a self-directed fashion, getting them to the 10,000 hours to mastery faster than standard work hours alone would provide.
  • Relief. Providing some variety in their life’s work can help avoid the burnout that comes from only working on one thing for too long.
  • Focus. Motivating them to get their work done efficiently because they don’t have every hour of the day to work on it. The saying goes, “If you want something done, ask a busy person” for a reason.
  • Contribute. The ability to help the greater tech community through contributions to open source projects, which wouldn’t exist without many people having side projects.
  • Network. They’ll often work with people outside their day job on these side projects, which will grow their learning and network. It might even provide the next recruit when you need more help at your startup.

And I’m sure there are others.

Great employees are a package deal.

In the early days of a startup, you want athletes, which are often entrepreneurs themselves.  Later, you want specialists who have deep expertise in their skills. By their nature the same skills you value each day in either group’s work for you also lends itself to having these side projects: In early employees that means a breadth of knowledge, while later, the depth of knowledge that comes from side projects is what makes many great later stage startup employees.

I would not be running product at KISSmetrics if I had only put my head down and worked on my past jobs (I wouldn’t even be in tech now most likely…I have a degree in Electrical Engineering). The skills that are core to my job came from side projects like Greenhorn Connect, taking the time to learn new skills in my free time and reading voraciously. Every founder wants to hire people with passion for their craft and a wide range or depth of skills.  This is a package deal.

“Why don’t you quit your job already?”

Taking a step back and looking at David’s argument, it seems centered around the idea that if an employee has a side project, they should quit their job immediately and start a company. While they should definitely quit their job if they’re ready to make a run at it as a business, they may not do that right away because of a few reasons:

  • Funding. They lack the personal funds and see the foolishness in fundraising when they don’t even know whether an idea has legs whatsoever.  Not all side projects have clear paths to revenue/bootstrapping either.
  • Motivation. Many side projects are for fun and passion. Sometimes those become businesses worthy of full time attention, but usually they are just an enjoyable thing to do with only part of their time.
  • Stability. Depending on what else is happening in their life, it may not be the time to start a company. If they’re getting married, just moved to a new city or a close family member is on their deathbed, they may not want the upheaval of launching a startup on top of that.

None of these reasons prevent a person from being a valuable contributor to your startup. In fact, someone may work for your company and add tremendous value you’d otherwise never receive.

This is a seller’s market.

If you have hard to find skills like design, product management or engineering, it’s a great time to be a startup employee. Companies must compete for you. With salaries skyrocketing, it takes more than money to attract talent. Having a good culture, treating people well and supporting them as individuals become important factors as well.

David’s views may work for him, but I caution other founders from adopting his cynical attitude towards those with side projects. The potential gains far outweigh any losses in hours David seems so concerned with and run the risk of turning off potential great team members.

Building a network is about playing the long game

When I moved to San Francisco, in many ways I was totally starting over. After 8 years in Boston including 3 in its tech scene, I had built many great friendships and connections. I still keep in touch with many of them today, but being across the country is definitely not the same as having beers, dinners and coffees regularly.

I find nothing more fascinating than the challenges and struggles in building a company and how some succeed where so many others fail. I greatly value the insights into how companies are run and the tough decisions leaders face, so it was really disappointing to suddenly miss out on all those conversations I was often privy to in Boston. As I’ve worked to rebuild what I had in Boston, I’ve come to realize an important lesson:

Building a network is about playing the long game.

A number of my friends in Boston are now successful founders and C level leaders. Many are raising B and C rounds right now and two even sold to Twitter for a substantial sum. I’ve learned an immense amount in conversations with them and found their first hand accounts inspiring.

As much as I would love to know the same caliber of successful founders in the Valley right away, it’s unlikely to happen. Instead, what I can do is the same thing I unintentionally did in Boston: get to know people before their startup success. Some of the aforementioned founders I knew when they had just raised an angel round, others before they even started working on their ideas and were instead employees at other startups.

You don’t know Jack.

I hear many people try to get to know the big names in town or even pretend they already do because they talked to Ev or Jack or Zuck once at an event. When you think about the odds of them remembering you or answering your email (if you even have their contact info) it’s pretty slim.

…but you could know the next Jack.

Instead, focus on getting to know the talented people around you that will be successful. Find ways to be helpful for them (much more likely than you being able to help Zuck) and keep it all in perspective; over time you will grow and develop and so will your friends. Like a fine wine you’ll find your network gets better with age. Those same people will happily return your emails and provide assistance no matter how successful they become. They may even work with you on your next venture.